Facebook's fourth quarter revenue was up 49% but its shares dropped in after-hours trading following the publication of results overnight.
Investors, it appears, are concerned that the company's expenses, $2.7 billion of them in that most recent quarter, are rising at an even faster pace than its revenue. That $2.7 billion is 87% higher than in the same period last year. Facebook is spending big on research and development and on stock payouts to staff. The social network says it is currently bringing in about $9 per quarter from North American users. But the overall average revenue per user is $2.81 indicating that European, Asian and African users are significantly less lucrative for the company at present.
The importance of the US market was underlined by Facebook as it announced plans to deliver "real-time" ads during Sunday's Superbowl - American football's championship game and the most-watched television event of the year stateside. That means targeting Facebook users who are watching the game and scanning the social network on their mobile phones with ads linked to the game and triggered by certain keywords mentioned in their newsfeeds.
Ian Dodson, co-founder of the Digital Marketing Institute, says that most advertising spend worldwide is spent on so-called "big brand advertising" and the Superbowl is the Olympics of big brand advertising in that sense. Large global companies will spend anywhere from $5m for a 30 second slot around the Superbowl and Facebook wants to capture some of that money from them to shift it on to social media or it wants the companies to use Facebook to amplify the message that they are getting across to their customers while they are "dual screening". In the past companies would have been able to target people on Facebook with advertising based on their likes or their profiles, Mr Dodson says. But now they are saying that based on what you actually type into Facebook live, they will present you with either and advert or a link or a video to stuff that you are interested in. Facebook is trying to dispose Twitter - the king of the live, up to date and real time platforms, he adds.
Despite last night's results from Facebook which showed quite clearly that the majority of its revenues are coming from the US and Europe, Mr Dodson says the figures were great. He said the most important thing about the figures is that they showed that mobile now represents about 79% of their total ad revenue - something that had been a real challenge to the company in the last few years.
MORNING BRIEF - The European Commission has said that Ireland could have set more ambitious deficit reduction targets to help get the national debt down to a more sustainable level. In its latest post-bailout programme report, the Commission said economic growth may beat its forecasts for the year ahead and that Ireland is likely to hit its deficit reduction targets. But, it said, the ratio of debt to economic growth is still high and more aggressive spending and taxation measures might have put it more firmly on a downward path.
*** Bank of England governor Mark Carney criticised the "timidity" of euro zone leaders in tackling the debt crisis at a speech in Dublin last night. The central banker said there is only so much monetary policy can achieve. Europe's leaders do not currently foresee fiscal union as part of monetary union, he said, "such timidity has costs". Mr Carney was delivering the Jim Flaherty lecture, commemorating the late former Canadian finance minister.